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Control levers: Advantages and Disadvantages of the Four Levers of Control

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Control levers: Advantages and Disadvantages of the Four Levers of Control

Introduction

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All popular themes in the current organizations suggest that the traditional controls might not be appropriate any longer: One of the major problems faced by managers today is maintaining control, productivity and efficiency while at the same time allowing employees to be creative, innovative, free and flexible (Simons, 170). The levers of control are important to top managers since they are a perfect solution to this problem. In business, levers of control refer to any kind of official information-based procedure or routine used by top management in organizational behavior (Simons 34).

This paper will discuss the advantages of the four levers of control in organizational setting.

Interactive control systems

Effective organizations put these systems in place for triggering be learning, tracking new ideas and for accurately positioning the company for its future. These systems focus on implementing and communicating on the organization’s strategy. Interactive systems include face-to-face dialogues and meetings between management and employees, incorporating process data into the organization’s management interaction, action plans and assumptions of subordinates and challenging data (Simons 179).

Advantages of interactive control systems

The system is simple and easily understandable by both managers and their subordinates. This is achieved through the clear and definite lines of generating and sharing ideas that is established, which allows subordinates to freely share their thoughts and opinions with the management. The system also facilitates employee motivation and commitment by involving them in the decision making process. Employees are always motivated when the managers use their ideas in running the organization or department and they become committed to ensure that the idea does not fail (Free Online Research Papers par. 16).

This system also ensures that there is continuous and consistent monitoring of employee performance which is very important in ensuring that tasks are done well and within the set time limits. With use of the interactive system, an organization sets specific procedures, objectives and guidelines for use; this facilitates the assignment of specific accountability and responsibility to each and every employee, hence proper division of labor and specialization is enhanced (Adams, Voehl, par. 22).

Since interactive systems usually ensure there is new tracking of ideas, they help in ensuring that there is timeliness of knowledge and information within the organization. This ensures that the organization attains a market lead in information regarding the development of new products, new markets or new methods of production. These factors are relevant in the achievement of a competitive advantage (Adams, Voehl par. 18). Based on the modern context of computerization and demands, interactive control systems are useful to entrepreneurs because they help them to improve data input, stock and output. For example, the java-based interactive control system assists entrepreneurs to develop several modules that are applicable and effective in different geographical regions and in varying situations. Interactive systems assist managers to engage themselves in regular decisions and routines of their subordinates (Simons, par 19).

Disadvantages of interactive control systems

Interactive systems are aimed at creating opportunities to every employee to be actively involved in organizational decision making process. Incorporating views of employees usually takes time, slowing down the decision making process (Masek). What is more, the system allows for both formal and informal lines of communication across the organizational structure. In most cases, informal communication becomes a source of gossip, grapevine and personal interest discussions which affect the productivity of the human resources (Free Online Research Papers par. 10). Again, these systems are responsible for setting the organization on its future; if wrong decisions are arrived at, they not only affect the success of the system but also the success of the entire organization (Simons, 155).

Belief Control Systems

These are control systems that organizations ought to have in order to control their commitment towards the organization’s vision, mission, purpose, credos and core values. They relate to the organization’s fundamental values and illustrate constraints in terms of workplace employee behavior. Beliefs systems are useful in communicating the tenets of organizational corporate culture to the employees (Adams, Voehl par. 4).

Advantages of belief control systems

Belief systems are a major source of inspiration and motivation that drives the direction of the organization because they communicate issues that are fundamental to the existence of an organization. These systems are extensive and are designed in such way that they appeal to many varying types of individuals working in different departments: managers, salespeople, clerical personnel as well as production workers (Simons 35). By using a formal belief control system, many conflicts between the employees and management or amongst employees are eliminated. This is because the system creates a work environment where all the people in an organization work towards a common objective, vision and mission (Simons, 177). They also strengthen team spirit within departments and reduce employee violence by clearly stating the code of behavior expected from all members of staff (Adams, Voehl par. 11). Belief systems also ensure that the managers also follow the organization’s code of ethics and behavior because for the employee to accept and apply them, they follow what the staff in top executive and supervisory positions are doing—the managers must first ‘walk the talk’. Therefore, they are non discriminatory (Masek). Without a well formalized belief system, employees working for huge and decentralized companies often lack a concise, clear understanding of their place within the organization and the organization’s core values. Consequently, lack of clear understanding of core values often force employees to make their own assumptions regarding what constitutes suitable workplace behavior (Simons, par 13).

Disadvantages of belief systems

Because of their broadness, belief systems are often criticized for lack of substance—critics argue that they do not have a specific line of application. In addition, belief systems cannot achieve their aim if employees do not believe, through watching the conduct of senior managers—this is because an organization’s listed beliefs usually represent values which are deep sited and if employees suspect their managers are experiencing motions of the current fad, they become cynical (Simons, par. 10).

Belief systems can also motivate employees to create new opportunities because they inspire people to search for new methods of creating value. This implies that they inspire employees to leave the company and search for better employment opportunities. This might lead to loss of key and productive employees which is expensive to an organization in terms of recruitment and replacement of talent (Adams, Voehl par. 14).

Boundary control systems

Boundary systems must be put in place by an organization to enable it keep- under -surveillance the territory for every participant. They comprise of codes of conduct, operational guidelines, asset purchase regulations and predefined strategic planning criteria (Simons 40).

Advantages of boundary systems

Since they define what is considered appropriate or inappropriate within an organization, they enable workers to focus their efforts on the areas which the company determines as best in terms of efficiency, profitability and productivity. Employees are able to work with a clear vision of what the management counts as best. Boundary systems also help in guarding the reputation of an organization—an asset which cannot be easily rebuild if damaged. For example a boundary system prohibits employees from discussing matters that involve clients with outsiders or if not for business purposes. This gives clients confidence when sharing their details with the company and ensures that they are satisfied and loyal (Masek).

As performance oriented organizations grow and become more decentralized, the risks of failures increases, forcing more leaders to ensure that the boundaries are well communicated and understood (Simon 39).

Thus, boundary control systems are the only effective method that managers can put in place to minimize or eliminate the risk of failures that may result from poor communication of the off-limits to employees (Adams, Voehl par. 15). Boundary systems include the strategic boundaries from which all employees are advised to stay off to avoid diminishing an organization’s competitive position. Therefore, when combined with the beliefs systems, they present dynamic tension between the inspirational, warm beliefs and the cold, dark, severe constraints. This establishes direction and motivates entire staff (Adams, Voehl par 17)

Disadvantages of boundary control systems

Boundary systems constitute ‘negative thinking’ because they normally tell the employee what not to do instead of what they ought to do: under ideal conditions, a system should guide users on what they ought to do instead of what they are not allowed to do. The boundary systems are biased in the sense they only focus on what the management perceives as an appropriate conduct of the employees, at the expense of the interests of employees. Therefore, they are criticized of being manipulative. In addition, they can create a work environment whereby employees only pay attention to what they are not supposed to do at the cost of what is expected of them and such situation is likely to jeopardize the mission and vision of the organization (Free Online Research par. 8).

Diagnostic control systems

These must be incorporated by an organization to facilitate optimization of outcomes and to get the job done. They include valuation standards, output measurement, compensation systems, and incentive systems. They help in providing theoretical information that indicates when a system is or is not in control (Simons 46).

Advantages of diagnostic control systems

These systems are very effective in terms of accuracy and promptness. They are accurate because they rely on statistical analysis, quantitative data and variance analysis. Managers use them to scan and review (on periodic basis) anything that may indicate impending problems and therefore measures are put in place to ensure that the issue is handled promptly before it creates emergences or disasters within the organization (Masek). Employee bonuses are in most organizations based on how performance goals have been realized when measured quantitatively. The diagnostic system works well when the goals are attainable and reasonable because it enables department managers to allocate tasks and attend other responsibilities at the same time: This releases them from perpetual surveillance of employees. In addition, the employees become free to accomplish their targets under reasonable but not excess pressure (Masek).

Disadvantages of diagnostic control measures

Although these control systems are exceptionally useful in detecting problems, they may encourage employees and also some managers to work unethically so as to meet the expected goals. This is because when the goals have been met, (regardless of the procedure used) figures such as budget figures cannot fluctuate and as such, the diagnostic system will not detect anything that may create negative attention to a certain person or department. This happens when the goals set are either too high to accomplish or when there is little time to complete them (Masek). When budget figures have been manipulated to meet the expected results, the short-term results may be satisfactory to the reporting manager but this will eventually result to long-run disaster to the organization (Masek).

Conclusion

Jointly, these four levers of control create action powerful forces that strengthen one another. As businesses become more multifaceted, managers will certainly deal with growing opportunities, competitive forces and declining attention and time. By effectively using the control levers, managers will become more confident that the benefits of creativity and innovation are not attained at the expense of organizational control.

Works cited

Adams, Bill &Voehl, Frank. “An Interactive Measurement Systems Approach”. 2010. Web. 3

     may 2010. <http://www.strategyassociates.cc/articles/balanced.html>

Free Online Research Papers. “The Value of the Modern Management Accounting System”.

     2006. Web. 3 may 2010. <http://www.freeonlineresearchpapers.com/value-modern-

     management-accounting-system>

Masek, Christine. “Control in the Age of Empowerment”. 2001. Web. 3 may 2010.

     <http://maaw.info/ArticleSummaries/ArtSumSimons95.htm>

Simons, Robert. “How New Top Managers Use Control Systems as Levers of Strategic

     Renewal”. Strategic management journal, 15(1994):169-189.

Simons, Robert. Levers of Control: How Managers Use Innovative Control Systems to Drive

     Strategic Renewal. Boston: Harvard Business Press, 1995.

Simons, Robert. “Control in an age of empowerment”. Business Credit. 1995. Web. 3 may 2010.

     <http://www.allbusiness.com/management/change-management/511507-1.html>

 

Cite this Control levers: Advantages and Disadvantages of the Four Levers of Control

Control levers: Advantages and Disadvantages of the Four Levers of Control. (2016, Aug 20). Retrieved from https://graduateway.com/control-levers-advantages-and-disadvantages-of-the-four-levers-of-control/

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